Population declined by tens of thousands
Home prices rose 7%
Childcare costs rose twice as quickly as inflation
Wages inadequate for rising cost of living
February 15, 2023 – Silicon Valley is perched on solid ground despite growing income and wealth divides, persistent racial inequities, and a dwindling population, according to the 2023 Silicon Valley Index, released today by Joint Venture Silicon Valley’s Institute for Regional Studies.
A valley of sweeping divides, Silicon Valley’s pendulum swings sharply between the haves and have-nots with ever-widening disparities in earnings and housing. In a first-ever look at Silicon Valley’s wealth inequality with the region’s ultra-high net worth households included, the top 10% hold 66% of the wealth; eight hold more wealth than that of the bottom 50% combined.
Large swaths of Silicon Valley’s population struggle to get by. There are double-digit percentages of residents (and a disproportionate share of children) in need of assistance but ineligible for public benefits because their income exceeds eligibility thresholds.
Institute analysis shows that people are leaving Silicon Valley in the highest numbers on record since the dot.com bust. Yet those patterns of outmigration have not affected soaring home prices which rose 7% in 2022, reaching a record-breaking median price of $1.53 million.
The economy is at full employment and growing despite a round of recent layoﬀs. An estimated 30 tech companies employing 42% of the region’s tech workers and just three companies, Google, Apple, and Meta account for 19% of the tech jobs.
Increases in the regional Consumer Price Index outpaced recent household income gains, while childcare costs have risen twice as quickly as inflation since 2010. Even as income inequality was lessening in the state and nation, it rose in Silicon Valley by 5% in 2021.
About 35% of people in Silicon Valley work from home most days of the week, up from 5% in 2019, a scenario that is upending transit ridership, commercial real estate leases, and downtown vitality.
“There’s no question that Silicon Valley is in flux,” said Russell Hancock, CEO of Joint Venture, and President of the Institute. “We see that the economy is at full employment and the tech sector is re-sizing and re-calibrating even as more employees opt to work from home.”
Rachel Massaro, Joint Venture Vice President, and Director of Research for the Institute doubles down on the widening divide. "Silicon Valley data never cease to surprise me. We live in a place where we can identify COVID surges by the amount people spend on home entertainment, and remote work in the number of internet speed tests," she said. "But on the less entertaining side, we also see rising community needs through the hundreds of thousands of meals our region’s food bank serves every day, the cost of childcare rising twice as quickly as everything else - multiplied by however many kids you have. And still, minimum wages get set at rates like $15.53 per hour as if those last three pennies were going to make the difference."
Key findings from the Index
The region continued battling surges, but the COVID death rate per capita declined in 2022.
COVID-19 dropped to Silicon Valley’s sixth leading cause of death in 2022, down from third in 2021.
The region recovered from pandemic job losses by April 2022. Unemployment hit an historic low. Tech is becoming more highly concentrated.
Silicon Valley added 88,000 jobs between mid-2021 and mid-2022, a growth rate of 5.4%. An estimated 22,000 jobs were added in the second half of the year. The 30 largest firms account for 42 % of tech employment (19 % are at Google, Apple, and Meta alone).
The rise and fall of the stock market drove large shifts in venture funding and IPOs.
Pandemic-period stock market gains of nearly $9 trillion proved transitory as the market tumbled in 2022. Half of all venture capital flowing to Silicon Valley or San Francisco companies was in the form of megadeals ($24.7 billion spread across 116 megadeals).
Demand for commercial space is tempered by remote work, but specialized R&D space is hot.
Though remote work is shifting the dynamic, leasing activity remained strong throughout 2022. While there was a 45% increase in the number of lease agreements, the average amount of space per lease has sharply declined.
Remote work is increasing, creating extra capacity on roadways and decimating public transit.
The share of remote workers grew to 35% in 2022, up from 28% in 2021. Private commuter shuttles are being put out of service. Caltrain ridership fell to 4,100 daily riders, down from 67,000 (-92%). BART recovered 35% of its pre-pandemic riders.
Silicon Valley’s population is declining; the share of young people is also falling.
Silicon Valley’s population declined by 38,900 residents between mid-2020 and mid-2021, the highest figure ever recorded. The decline was due to a 74% rise in domestic outmigration, a reversal of the net flow of foreign immigrants (-103 %), declining birth rates, and rising death rates.
The pandemic and patterns of outmigration haven’t affected soaring home prices
Silicon Valley’s high home prices rose 7% in 2022, reaching a record-breaking median price of $1.53 million. The share of first-time homebuyers who can afford a median priced home fell to 27% and is as low as 14% for the region’s Black or African Americans and Hispanic or Latino residents.
Inflation outpaced income gains; assistance programs scale upwards
Increases in the regional Consumer Price Index since 2019 outpaced household income gains, resulting in a $550 decline in median household income in 2021. Childcare costs rose twice as quickly as the regional inflation rate since 2010 (+85%). Average wages vary significantly across racial and ethnic groups, with the largest disparity between Hispanic or Latino and White, not Hispanic or Latino residents.
Silicon Valley has the nation’s largest gaps, and they are increasing.
For the first time ever, ultra-high net worth households are included in regional wealth data. Through this lens, inequality is even more stark, with the top 0.001% of Silicon Valley’s households holding more wealth than the nearly 500,000 households in the bottom 50%.
- In 2022 the top 10 % of Silicon Valley households hold 66% of the wealth; eight Silicon Valley households residents hold more wealth than that of the bottom 50% combined (nearly half a million households).
- While income inequality was lessening in the state and nation (down 1 and 3%) it rose in Silicon Valley by 5% in 2021.
- 28% of Silicon Valley households are below income-adequacy; those households include 42% of the region’s children. 42% of children in San Mateo and Santa Clara counties live in households that are not self-sufficient; the most influential factor for these households is the cost of childcare.
- Income adequacy varies significantly by race and ethnicity. Among those most likely to live below Self-Sufficiency Standards are Hispanic or Latino non-citizens and those with limited English.
Rachel Massaro, Joint Venture Vice President and Director of Research for the Silicon Valley Institute for Regional Studies, authored the Index with Heidi Young, Senior Researcher at Joint Venture and the Institute. The study reports the latest data and trends in economic development, workforce, housing, education, public health, land use, environment, governance, arts, and other sectors throughout Santa Clara and San Mateo counties and portions of Alameda and Santa Cruz counties and San Francisco.
The complete 2023 Silicon Valley Index is accessible online at www.siliconvalleyindicators.org and may be downloaded from the Joint Venture website.
The Index is published in conjunction with the annual “State of the Valley” conference, a town hall-style gathering of regional leaders, elected officials and citizens in a discussion of Silicon Valley’s economic opportunities, challenges and future. The 2023 State of the Valley conference takes place Friday, February 17.
About Joint Venture Silicon Valley
Established in 1993, Joint Venture provides analysis and action on issues affecting the Silicon Valley economy and quality of life. The organization brings together established and emerging leaders—from business, government, academia, labor and the broader community—to spotlight issues, launch projects and work toward innovative solutions. For more information, visit www.jointventure.org.
About the Silicon Valley Institute for Regional Studies
The Silicon Valley Institute for Regional Studies is the research arm of Joint Venture Silicon Valley, and is housed within the organization. The Institute provides research and analysis on a host of issues facing Silicon Valley’s economy and society. For more information, visit www.siliconvalleyindicators.org.